Permian – update through January 2017

This interactive presentation contains the latest oil & gas production data from 10966 selected horizontal wells in the Permian (Texas & New Mexico) that started producing since 2010 (2009 for New Mexico), through January 2017.

Unlike the other tight oil basins, oil production in the Permian has continued to rise over the past 2 years. The wells that started production in 2015 and 2016, though fewer in number, contributed more new production by the end of these years than the 2014 wells did, as the graph above shows. You can see this in more detail if you hover your mouse over (or tap on) the December months of each of these vintages, after which a tooltip will reveal both the well count, and the oil production from these wells.

Once revisions are in, I expect that we will see that the rise in production has continued in the last few months shown in this graph.

The steady increase in output from this basin can probably for a good part be explained by the well production profiles shown in the “Well quality” tab. The improvements in productivity over the years are clearly visible here, and, also unlike the other oil basins, they have not been confined to the initial couple of months.

A number of factors are behind these increases in well productivity and total production, such as longer laterals and larger frac sizes. On the last point; based on FracFocus data, it appears that the water volume used per completion in New Mexico increased from below 1.5 million gallons in 2012/2013 to more than 7 million gallons in early 2017. This increase was similar in Texas, where the average completion now uses more than 10 million gallons of water, triple of what it was in 2013. I expect that the amount of proppant used has increased with a similar proportion.

The ‘Advanced Insights’ presentation is displayed below:

This “Ultimate recovery” overview shows how all these horizontal wells progress towards their ultimate recovery, as their production rate slows down over time. All wells are grouped by the quarter in which they started production.

The graph reveals the clear progression in improvements of these trajectories over time, for both oil and gas. It will be interesting to see whether this trend can continue, now that operators have started to complete more wells.

You can also see the increase in well productivity over time in the 5th tab (“Productivity over time”), as measured by the average cumulative production in the first 2 years on production. The rise is even sharper if you measure this metric by a shorter duration, as still most of the effect of increased frac sizes takes place in the early months.

By Wednesday I aim to have a new post on all covered US states, followed by another update on North Dakota.

Production data is subject to revisions, especially for the last few months in Texas.

Note that a significant portion of oil production in the Permian comes from vertical wells and/or wells that started production before 2010, which are excluded from these presentations.

For these presentations, I used data gathered from the following sources:

Texas RRC. I’ve estimated individual well production from well status & lease production data, as these are otherwise not provided. Because of these estimations, I recommend looking at larger samples (>50 wells) before drawing conclusions. About 7% of the horizontal Permian wells in Texas are excluded, as these were mixed with too many vertical wells on a lease, making reasonable well profile estimations impossible. I’ve no spud, DUC, or plugging information on wells in Texas, so these statuses are unavailable. Detailed location data is available for all New Mexico wells, and for almost 95% of the Texan wells displayed; the remaining wells are shown near the center of the county in which they are located. Formation data in Texas is only available on lease level; therefore in cases where wells on the same lease are drilled in different formations, this information is not accurate.

OCD in New Mexico. Accurate individual well production data is provided.

FracFocus.org

====BRIEF MANUAL====

The above presentation has many interactive features:

You can click through the blocks on the top to see the slides.

Each slide has filters that can be set, e.g. to select individual or groups of operators. You can first click “all” to deselect all items. You have to click the “apply” button at the bottom to enforce the changes. After that, click anywhere on the presentation.

Tooltips are shown by just hovering the mouse over parts of the presentation.

You can move the map around, and zoom in/out.

By clicking on the legend you can highlight selected items.

Note that filters have to be set for each tab separately.

The operator who currently owns the well is designated by “operator (current)”. The operator who operated a well in a past month is designated by “operator (actual)”. This distinction is useful when the ownership of a well changed over time.

If you have any questions on how to use the interactivity, or how to analyze specific questions, please don’t hesitate to ask.

Although Martin and Reeves County are about 1/4rth of Permian production, the charts below illustrate the impact they have on average well performance.

On the left, Martin and Reeves are selected from the Ultimate Recovery window. On the right they are excluded.

The red circles are reference points to an Apache 2014 simulation presentation which results in a cumulative recovery of about 250 MSTBO at 10 BOPD. Martin and Reeves 2016 and 2017 wells have a good chance to exceed this theoretical behavior, while the right hand wells do not.

Interesting findings Jim, thank you for sharing this. As you show here, and as I also found for other basins, the overall trends shown in my high-level graphs do regularly hide remarkable sub-trends. For example, it sometimes appears that well productivity is improving, when in fact operations are just moving towards a more productive area (high-grading).

I sometimes use the “Cumulative production ranking” overview to figure out what are the most productive counties/fields/formations/operators, and then use the “Well quality” or “Ultimate recovery” overviews to see if there are interesting trends in performance to be found for only these wells.

That’s cool, Jim; thanks. I hold that at $53 hedged oil prices the weighed net back price, or take home pay per barrel of oil, after taxes, royalty deductions, incremental lift costs per BO, not BOE, G&A and interest expenses (from 201610K’s) is something in the order of $25.00. For what I believe are typical Permian well costs of $8M, a well like that will require 320M BO to payout.

Anecdotally, I flew over the Permian a few nights ago, an west-east cross section through both basins, and believe there must be billions of MCF’s of gas getting flared; the magnitude of waste occurring was quite remarkable, actually.